I've been an entrepreneur for as long as I can remember. As a kid, I started selling cool rocks even before I sold lemonade. At age 8, I hired my two friends to deliver newspapers and gave them 75 cents a day, and I kept 25 cents. I've gone on to start much larger companies, divisions within companies, both within the US and outside, that have led to both success and failure. Venture backed, partnerships, bootstrapped, high growth, retail, commercial real estate, technology, energy, B2B, B2C, B20 - nobody is there to buy) and more. I’ve learned my greatest life and business lessons from my failures. I recently completed a book for Wiley & Sons, entitled The 7 Non Negotiables of Winning: Tying Soft Traits to Hard Results, which you can read about here: http://www.7nns.com. My current company, Fishbowl, is a culmination of everything I’ve learned over my 30-plus business years.

Answers To Three Big Data Questions Every Entrepreneur Needs To Know

Big Data! Everyone is talking about it these days. Knowledge is strength and data is knowledge.

There is a good chance that in the near future, your boss is going to call on you during the next strategic planning meeting and inquire, “What are your plans for interpreting Big Data to provide a strong ROI for the company?” We want you to be prepared with something substantive and useful in your reply. Success is in the preparation.

It’s easy to get carried away in all the hoopla, and want to pursue everything that is coming out of Silicon Valley. It’s fun to get all of the latest gadgets, but it’s not practical and can also become expensive and time consuming without a proper understanding of the basic foundation of information gathering. In today’s world of multi-billion-dollar valuations for the best data fields, your data is one of your biggest assets. It needs to be organized, protected, used, and understood. In a previous column, we explored how the Hubble Telescope provided unusable images in the beginning because of a faulty mirror that was slightly too flat.

To cut through all the hype, our team at Fishbowl came up with three compelling questions and worked together to answer them.

Why should you care about Big Data?

What do you need to know about it?

How can you and your business benefit from it?

Why Should You Care?

There is currently an explosion of data coming from all angles of our world today. At our company we believe in not only tracking and reporting on inventory, but on virtually every other aspect of our business, too. An emotional decision not backed by data can cause business leaders to make incorrect decisions. Data is neutral and provides a foundation of facts to make effective, smart decisions. This data needs to be used to help your profitability and your strategy, no matter how big or how small you plan to use it to inform your organization.

What Do You Need to Know?

Our team believes it’s important not to get lost in the misconstrued thinking that Big Data is just fad. If anyone believes that, they might as well go back to using a typewriter because PCs and tablets are just the flavor of the week. Big Data ultimately makes your job easier. Data science is undeniably your friend and partner in making the best informed decisions for your business.

Examples of Big Data use:

Manufacturers monitoring social networks to detect aftermarket support issues, such as before a warranty failure becomes publicly detrimental.

Hospitals analyzing data to predict patients that are likely to be readmitted within months of discharge.

Even though you may not have the Big Data sets that companies like Facebook, Twitter, and Google have, you have your own data that you collect on customers, prospects, and more. This is data that you can to start using today to remain competitive.

Here are four simple steps to initiate a data project in your business today:

Organize your data

Stop placing data in different locations and in different formats. Look at centralizing your data and cleaning it up. Moving forward, the more organized and centralized your data is, the easier it will be to use and mine.

Find ways to collect more data

If it doesn’t hurt your organization to just add 2-3 more columns of information you collect about a customer, DO IT! Whether your company is completely Web-based or it has point-of-sale interaction with customers, there are always opportunities to collect more data. Look for them so you can make better decisions down the road.

Take advantage of public data

The government is making data public at the national, state, county, and city level so that small businesses like yours can benefit. You have at your fingertips housing records, demographics, crime, census, salary, and legislation records, to name a few. They continue to make this data more easily accessible, and it’s important to gather and make use of it.

Start solving data-centered problems

After you’re organized and have your data, you need to start asking the right questions about your business. Why do we run out of Pop-Tarts when there’s a hurricane? (A classic Wal-Mart study in data analysis) What effect does the temperature outside have on my restaurant? How do negative comments on Yelp, Facebook, and Google affect my business? What is the best way to go about repairing damaged relationships and negative comments? What combination of personnel is the most efficient?

After asking the right questions you need someone to analyze the data and come up with the right answers. Perhaps you have someone in your company who is already competent with Statistics, Mathematics, Linear Mapping, or Machine Learning. Some problems can be easily solved with basic regression models. Or you can go to your local university or community college and see if a professor of these fields would take on some of these tasks as a project to teach his class. I’ll bet they would love to. Or offer prizes to students for the best answers to your problems. You can also hire a consultant to help for quicker results.

Big Data is an emerging field and full of opportunity and growth. An excellent guide to technique and execution is Data Science for Business (Foster Provost & Tom Fawcett, 2013).

The earlier you start using these techniques to make decisions, the more likely your business will be successful in the long term. Fishbowl’s got your back and we’ll continue to do our research to keep you in the know. We look forward to hearing from you.

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Good stuff Dave. We recently took on a project that we affectionately call “Frodo” to organize our data into one big data warehouse. The reporting that we get out of this project has more than paid for itself in efficiency and better decision making. Thanks for sharing Dave and Chris.

I think one of the common misconceptions about the importance of data collection is that people want to know how it will help them before they collect the data. The real gem in data collection is that almost all of the benefit is identified AFTER the data is collected and analyzed. It’s like the old saying “You don’t know what you don’t know until you know it”. Data collection, if done unobtrusively, can be a fantastic tool for measuring and plotting improvements.

I’ve seen first hand how this can have such a great effect on us here at Fishbowl. Every company can greatly benefit from these simple practices. After working with numerous customers that purchased Fishbowl Inventory, I have noticed the difference between those who have their data taken care of, and those that don’t. Those who do spend the little extra time to take care of their data are always better off in the long run. Those who don’t, should definitely follow this guide. Thanks Dave!

So true. Without knowing our own data we are just putting our wet finger in the air and hoping it blows from the right direction. Data is king and to keep enough is probably not something we could ever do.

Thanks Dave. I really liked your comment when you said, “An emotional decision not backed by data can cause business leaders to make incorrect decisions.” Being able to make decisions based off of facts and real data can help businesses avoid making bad choices.